In the case of St. Louis, Iron Mountain & Southern Railway Company v. Craft in 1914, the U.S Supreme Court ruled that a railway company could be held liable for damages caused by its negligence even if it had not been directly involved in transporting goods at the time of damage. The plaintiff, Craft, shipped cotton via two railroads: first through Texas & Pacific Railway and then through St. Louis, Iron Mountain & Southern Railway (SLIMS). Upon arrival at SLIMS's station before being transported further to its destination on another railroad line, some bales were damaged due to rain because they were left uncovered overnight by SLIMS employees despite knowing about an incoming storm forecasted. The court decided that while SLIMS was not actively engaged in transportation when the damage occurred but merely storing them temporarily as part of their overall duty as a carrier under contract with Craft; this did not absolve them from liability for any harm resulting from their negligent actions or omissions during such period.

In the dissenting opinion for St. Louis, Iron Mountain & Southern Railway Company v. Craft (1914), it was argued that the majority's decision to hold a railway company liable for damages caused by its employees' negligence misinterpreted existing law and set a dangerous precedent. The dissenting justices contended that under Arkansas state law, which governed this case, an employer could only be held responsible if they had some knowledge of their employee's incompetence or recklessness beforehand. In this particular case, there was no evidence presented to suggest that the railway company knew about any potential risk posed by its employees before the accident occurred. Therefore, according to these justices, it should not have been held accountable for their actions in court.